SMALL BUSINESS; Making Necessities Stylish And Getting a Higher Price

By DALIA FAHMY

Published: March 9, 2006

While preparing for the arrival of their first baby five years ago, Michael and Ellen Diamant came to a realization that hits many design-conscious parents: diaper bags, bottle warmers and nipple racks don't fit into their decorating scheme.

As entrepreneurs, the Diamants had stumbled on a market opportunity. Like a growing number of small-business owners, they felt they could crack a competitive market by adding a splash of cool to traditionally bland consumer goods. ''We decided to take products that are under the radar and turn them into objects that are beautiful to look at,'' he said.

Betting on demand from like-minded parents, the Diamants three years ago founded a baby-gear company, Skip Hop. They started with a line of messenger-style diaper bags that now grosses several million dollars a year. This summer, with the help of the award-winning product designer Scott Henderson, they will branch into baby bottle racks, diaper caddies and jar organizers. His designs -- boldly curved and brightly colored in glossy blue and pink -- look more like Design Within Reach than Babies ''R'' Us.

While the large companies that dominate most consumer goods sectors stick to safe looks that test well with broad audiences, entrepreneurs say they can attract a following by taking a little more risk with bolder designs. And their products command premium prices.

''When a market is governed by a large industry, small entrepreneurs have to come in at a higher price,'' said Karim Rashid, a prolific designer who has lent his futuristic look to everything from Prada cream tubes to Sony Walkmans. Requests for his services from small-business owners, he says, have soared in the last few years. ''The only thing they can compete with is the experience of the product itself,'' he said.

These businesses range from husband-and-wife partnerships like Skip Hop to booming start-ups with contracts at major chain stores.

Simplehuman, for example, a kitchen gadget maker founded five years ago in Los Angeles, has $80 million in sales annually through a slick line of dish racks, pedal-operated trash cans and paper towel dispensers available everywhere from Crate & Barrel to Target.

''We wanted to take the most mundane thing that nobody cares about and innovate on it,'' its chief executive and founder, Frank Yang, said. ''So we started with the trash can.''

Designers say Simplehuman revolutionized the dish rack industry two years ago with its award-winning stainless steel and frosted plastic version. Competitors have since scrambled to update their offerings.

Of course, exceptional design has always helped sell merchandise; entrepreneurs like Steven P. Jobs of Apple and Philip H. Knight of Nike have built empires by getting creative with laptops and athletic shoes.

Still, until recently, most company executives cared more about how much a product would cost to manufacture or how long it would take to ship, says Michele Caniato, head of Culture & Commerce, a consulting firm that pairs designers with companies. The names of designers rarely came up in board meetings.

That has changed in the last five years, says David Martin, North American head of brand consultancy for Interbrand.

Small-business owners are starting to catch on, and securing lucrative shelf space in unexpected store aisles. For example, Method, a manufacturer in San Francisco, used updated packaging to break into the competitive world of detergents.

''If you look at household cleaners in the market, you'll find that every bottle has the exact same silhouette,'' said its co-founder and co-chief executive, Eric Ryan, describing an industrial shape plastered in garish ad copy reminiscent of the 1950's. ''They're not bottles you'd want to leave out by the kitchen sink.''

To set themselves apart from competitors like Procter & Gamble and Clorox, Mr. Ryan and his partner, Adam Lowry, commissioned Mr. Rashid to create minimally labeled curvy clear bottles filled with candy-colored liquids. They made dish soap look more like perfume.

Experts credit the kitchen tool maker Oxo, now a thriving subsidiary of Helen of Troy, for introducing modern design to America's supermarket aisles. Oxo started 15 years ago when its founder, Sam Farber, designed vegetable peelers and jar openers that would spare his wife's arthritic hands. At the time, many doubted that shoppers would spend $6, or triple the market rate, for a kitchen tool meant to be replaced every few years.

''Oxo represented an entirely different model,'' said Perry Reynolds, head of marketing at the International Housewares Association. ''Consumers said 'I've been buying these things every couple of years for a while, and I finally want to get a good one.' ''

Although Mr. Farber focused more on ergonomics, he also raised the aesthetic bar with his distinctively rounded black rubber handles and red trimmings.

Since then, other entrepreneurs have followed his example by improving on the look and feel of the most utilitarian tools: Modo, a company in Oregon, makes medical equipment carts with curved lines and red wheels that evoke Italian strollers. Bright green and orange neoprene bottle totes from Built NY won a design award in 2004.

These companies are still an exception, but the trend is gaining momentum. Technological advances, for example, are making it easier to realize even the most complicated designs. Outsourcing gives entrepreneurs without factories access to the tools of mass production.

And with fewer rules and decision makers to slow them, small businesses can cater to changing tastes more quickly. While Procter & Gamble might spend two years testing a new dispenser, Method had its bottles for sale within six months after hiring Mr. Rashid.

Changing tastes are another factor in new design. Shoppers want objects that not only look cool, but that also speak to them.

''Design is a communicating device,'' says Kristina Goodrich, executive director of the designers' society. ''It can tell you how to pick up a stapler; it can show you how to not to touch something that's hot.''

While these heavily designed versions of everyday items are easy to spot, defining them is another matter. Experts say well-designed products are heavy on ergonomic comfort and light on superfluous, or purely decorative, detail. But there is also a more elusive quality that some refer to as the ''Wow'' effect.

For entrepreneurs, that effect comes at a price. Method's founders were able to afford Mr. Rashid -- one of the world's most expensive designers -- by giving him an equity stake and a four-year contract.

As a result, most heavily designed products are more expensive.

Even Skip Hop's bottle racks, at over $30 each, will cost more than double the price of a more pedestrian design. But Mr. Diamant says the popularity of the diaper bags proves that shoppers are willing to spend a little extra to escape the teddy bear motif. ''People like that one step up in luxury.''

Photo: Michael and Ellen Diamant did not like the look of things like diaper bags when their son, Spencer, was born, so they designed new ones. (Photo by Richard Perry/The New York Times)